The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Douglas Emmett, Inc. (NYSE:DEI).
Douglas Emmett, Inc. (NYSE:DEI) was in 22 hedge funds' portfolios at the end of March. DEI has seen an increase in enthusiasm from smart money of late. There were 19 hedge funds in our database with DEI positions at the end of the previous quarter. Our calculations also showed that DEI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are several gauges stock market investors employ to appraise publicly traded companies. Two of the most under-the-radar gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can outclass the S&P 500 by a superb margin (see the details here).
[caption id="attachment_747404" align="aligncenter" width="393"] Stuart Zimmer of Zimmer Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's review the key hedge fund action surrounding Douglas Emmett, Inc. (NYSE:DEI).
How are hedge funds trading Douglas Emmett, Inc. (NYSE:DEI)?
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in DEI a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Zimmer Partners held the most valuable stake in Douglas Emmett, Inc. (NYSE:DEI), which was worth $192.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $118.5 million worth of shares. Citadel Investment Group, Diamond Hill Capital, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zimmer Partners allocated the biggest weight to Douglas Emmett, Inc. (NYSE:DEI), around 4.26% of its 13F portfolio. EMS Capital is also relatively very bullish on the stock, designating 0.69 percent of its 13F equity portfolio to DEI.
Now, key hedge funds have been driving this bullishness. Diamond Hill Capital, managed by Ric Dillon, assembled the most outsized position in Douglas Emmett, Inc. (NYSE:DEI). Diamond Hill Capital had $41.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $32.8 million position during the quarter. The other funds with new positions in the stock are Edmond M. Safra's EMS Capital, Paul Tudor Jones's Tudor Investment Corp, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Douglas Emmett, Inc. (NYSE:DEI) but similarly valued. We will take a look at China Southern Airlines Co Ltd (NYSE:ZNH), James Hardie Industries plc (NYSE:JHX), News Corp (NASDAQ:NWS), and CACI International Inc (NYSE:CACI). This group of stocks' market caps resemble DEI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZNH,2,7964,-1 JHX,4,6976,1 NWS,13,28126,6 CACI,25,321834,1 Average,11,91225,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $526 million in DEI's case. CACI International Inc (NYSE:CACI) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 2 bullish hedge fund positions. Douglas Emmett, Inc. (NYSE:DEI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately DEI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on DEI were disappointed as the stock returned 4.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.